Albertson's Second Quarter Earnings Exceed Targets

Albertson's Inc., one of the world's largest food and drug retailers, on Tuesday reported second-quarter earnings that exceeded both company guidance and First Call consensus estimates. Sales in the quarter totaled almost $9.6 billion. Before restructuring and other charges diluted EPS were $0.45 and net earnings for the period totaled $184 million. Company guidance for EPS was at least $0.43 and First Call consensus was $0.44.

Larry Johnston, Chairman and CEO said, "We are very encouraged by these results and remain committed to taking the steps necessary to unleash the full shareholder value that is inherent in this great company. The results we are reporting today prove that the plans we have implemented are beginning to give us traction to continue moving the company in the right direction. We will continue taking the steps necessary to sustain our positive momentum, remaining sharply focused on our five strategic imperatives."

For the 13-week period ended August 2, 2001, total sales increased 3.9% when compared to the year earlier period. Comparable store sales, including replacements increased 1.9% and identical store sales increased 1.5%.

As previously announced, the company recorded a charge in the second quarter to cover a major portion of its recently announced restructuring program. The second quarter charge totaled $558 million pretax, $0.82 per share, covering severance benefits, asset impairments and lease terminations including $450 million in noncash charges. Johnston said, "This restructuring plan is a major step in returning Albertson's to peak competitive condition. The associated charges will be justified in a relatively short period of time by the company's improved performance." Including restructuring and other charges, the company reported a net loss for the quarter of $151 million or $0.37 per share.

Commenting on the company's positive sales momentum, Peter Lynch, President and COO said, "Throughout this quarter, the company's increased investment in our strategic sales initiatives resulted in same-store sales growth above the velocity of the industry. This investment also drove a slight gross margin decrease during the quarter. However, in future quarters we will have a whole new source of funds to invest in the marketplace as we begin to realize the benefits of our restructuring activities. Our plan is to continue to drive positive sales momentum by investing a significant portion of these dollars in selected strategic markets. We fully expect that these actions, coupled with our continued thrust into corporate brands and value-added products, will result in both strong sales and improved gross margins."
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